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Farepak – the ghost of Christmas past?

12 December, 2018Keith Pond

Happy Christmas 2006?

On 22 October 2006 European Home Retail PLC (EHR) appointed Administrative Receivers (PWC), under a debenture granted to HBOS in 2000.

Not something earth shattering, in itself, but the timing – 8 weeks to Christmas (that’s around 56 more sleeps) sent reverberations through the press (Smithers, 2006 for example), the banks, the consuming public and the corridors of power.

EHR was the parent company of Farepak, a Christmas “savings” club, loved by lower income families as an easy way to save for the expense of Christmas.  However, the FSA ultimately washed its hands – the “savings” were, in fact, deposits – and unprotected by regulation. The “savers” became involuntary creditors (in excess of £40m.) in an insolvency where they were never likely to see their money returned.


The Christmas “gift” that keeps on giving…

The impact of the Farepak collapse in 2006 was felt for a number of years. Competitor, Park Group, took until 2012 to fully recover as consumers lost trust in such schemes (BBC, 2012).

Bankers, HBOS, might have thought that they had escaped relatively cleanly as they withdrew credit lines and used customer deposits and realisation of their charges over company assets to repay their debts (all above board and normal banking practice).  However, in a 2012 court case against former Farepak Directors the bank was blamed for causing the failure – a moral, rather than legal judgement – but a stinging rebuke nonetheless (Neate, 2012).

Ultimately, as an ICAEW member, William Rollason, former CEO of EHR was given a slap on the wrist, a £15,000 fine and asked to pay £50,000 in costs by a tribunal in 2013 (Economia, 2013).  He had been accused of misconduct and recklessness although a third claim of dishonesty had been dropped. Luckily, he reportedly retained personal assets held abroad and escaped disqualification as a director due to the mishandling of the case against him and fellow directors by The Insolvency Service.

A happy Christmas ending?

After a long 6 year wait, the ordinary unsecured creditors in the insolvency, largely the deposit paying customers, got about half of their money back.

And the moral of this Christmas story, dear children?

A happy Christmas for some is often at the cost of an unhappy one for others.

Happy Christmas.


Smithers R, 2006, Farepak boss says sorry to customers, The Guardian,  https://www.theguardian.com/money/2006/nov/14/business.consumernews

BBC, 2012, Christmas Savings Club recovers, BBC News, http://news.bbc.co.uk/1/hi/business/7329933.stm

Neate R, 2012, Farepak collapse caused by bankers, says judge, The Guardian, https://www.theguardian.com/business/2012/jun/21/farepak-collapse-caused-bankers-judge

Economia, 2013, Farepak Director fined and severely reprimanded, https://economia.icaew.com/news/june2013/farepak-director-fined-and-severely-reprimanded

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